No matter where you stand on current issues, I think there’s one thing we can all agree on: 2020 is a year none of us will forget. Almost everyone has felt some uncertainty at some point this year – whether it’s about health concerns, the market, politics, or social justice – so it’s important to tap into resources that might help us feel more in control of our situation.
A subject that has come up with some of our clients is early retirement; with some people wondering about job security or dealing with the stress of working through a pandemic, leaving the workforce is something they’re considering. This year has also inspired more people to really look at how they spend their time and if they’re finding fulfillment and purpose in what they’re doing. So, let’s talk about what you should consider before you hand in your notice.
1. Life expectancy
One of the more difficult things to consider when working on a financial plan is how long you’re expecting to live. Yes, I know – it’s a really uncomfortable subject. Unfortunately, it’s a big factor when it comes to calculating how much you’ll need for retirement. It’s time to get real and think about how long your parents and grandparents lived and any family health conditions that might be an issue as you age. The closer we can get with this estimate, the more secure you might feel about making the decision to retire.
2. Healthcare Costs
Your healthcare and benefits will usually be a determining factor when thinking about retirement. Does your employer offer healthcare to you and/or your spouse should you retire early? Is your spouse thinking about working longer and able to cover healthcare costs for you and your family? Have you shopped insurance rates with local insurance brokers, so you know your options? The cost of healthcare can sometimes derail a retirement plan if not carefully considered. It’s best to stay informed.
3. Long-Term Care
Another possible facet of the cost of healthcare is long-term care: are you financially prepared should you be diagnosed with an illness or are unable to care for yourself? Determining your options could mean involving other family members in the discussion or contacting outside resources and/or insurance professionals. Again, doing your best to plan for the unknown can help you answer the “early retirement” question.
4. Living Situation
How established are you in your current home? Are you there for the long haul or do you have a plan in place? Before retiring early it’s important to consider whether downsizing is in your future or if renovations might be needed down the line to allow you to stay in your home as long as possible. This is your opportunity to sit down with your spouse and/or family to talk about your options and determine a timeline of your living situation.
This is actually a huge factor in deciding about your retirement and one that we always discuss with our clients: what do you like to do? We’ve written several blogs about this topic because it’s often an unexpected “hiccup” for new retirees. Many people we work with have found that free time seems very enticing…for about a month or two. Then the boredom sets in and the permanency of being at home, day in and day out, becomes a reality they were not prepared for mentally. If you don’t have many hobbies, now is the time to start exploring a variety of things. If you are looking for different ways to plug in and volunteer, we have many organizations we can connect you with (CLICK HERE).
Is it time to talk to a professional?
One of the best things about working with a professional financial planner is the unemotional and unbiased perspective they can give you about your retirement planning. We’re able to listen to your goals and fears and help keep you on the best path that’s right for you.
If you’re considering early retirement, let’s talk about your options. CLICK HERE to make an appointment.
Debbie Charpentier has been serving clients since 1989 by using a holistic, comprehensive approach that helps clients create the life they value and the legacy they envision. Charpentier Wealth Strategies is a Bakersfield, CA Financial Planning practice that offers fee-based financial planning services. To contact Debbie, email Debbie.Charpentier@LFG.com. http://charpentierwealth.com/ Debbie Charpentier is a registered representative offering securities and investment advisory services through Lincoln Financial Advisors Corp., (Member SIPC). Charpentier Wealth Strategies is not an affiliate of Lincoln Financial Advisors. CRN3320283-110620